Covid19 Pandemic Requires Socialism - Bernie's policies are becoming
necessary
Newsletter published on April 13, 2020
(1) Only Socialist Financing can prevent a Depression
(2) Covid19 Pandemic Requires Socialism - Bernie's policies are becoming
necessary
(3) Fed and Treasury funding Covid response looks a lot like the MMT
Bernie was promising
(4) Change the Accounting rules to discourage Borrowing; remove
Deductibility of Interest
(5) Bank Of England Will Directly Finance Government Coronavirus
Spending - Positive Money
(6) Bank of England to finance UK gov't; looks like Monetary Financing,
despite denial
(7) BoE gives British gov't unlimited overdraft (interest free) to pay
wages; looks like Monetary Financing
(8) US ponders Monetary Financing, like Europe. That's the way to keep
millions in work
(9) Spooks calls for Strategic Protectionism to keep essential
industries nationally owned
(10) Economist warns against Strategic Protectionism
(11) Positive Money calls for Central Banks to issue Digital Cash
(12) Bradbury Pounds (Treasury Notes) funded Britain in WWI, debt-free money
(1) Only Socialist Financing can prevent a Depression
by Peter Myers, April 13, 2020
It is quite risky for me to argue this case to American readers, so
embedded is the Libertarian mindset in that country.
They imagine a land of homesteaders, as in the westward movement of the
nineteenth century: small farmers and small businessmen whose only wish
was to be left alone.
But the reality today is the Libertarianism of Wall Street, in which
billionaire 'donors' buy Congress and the Presidency.
Their Globalist policies have caused the current crisis, and the
American mismanagement of it is systemic, not the fault of just one man
or one party.
We must return to Big Government, as we had before Thatcherism and
Reaganomics.
But, the Libertarians say, we already have Big Government - the Nanny
State, and now a police state too.
Yes, but Government in the USA is weak; the real power lies with
Corporations, Foundations, and billionaires. And the only way to
overthrow them is with Big Government. Not one that THEY control, but
one that WE control.
Britain and Australia had such governments in the postwar years until
the Thatcherites dismantled them. Canada and New Zealand did too, I believe.
The first sign that we had a government in OUR favour not theirs, is
that it would shut the tax havens, get rid of tax-evasion loopholes,
restore the high tax rates on the rich as were standard in the 1950s,
get rid of Double Taxation agreements, and cancel Student debt and Third
World debt.
Private banks create money when they issue loans. Unlike building
societies, no-one has any less, when a bank creates money.
Central banks create noney ex nihilo. Money creation by public
authorities is free. The only reason to demand interest, and even the
repayment of principal, is to prevent inflation, and to maintain the
value of the currency relative to other currencies.
In recent years, the Bank of Japan has been engaging in Monetary
Financing without causing inflation.
But at a time when nearly all countries are in the same boat, they can
all can engage in Monetary Financing without their exchange rates being
much affected.
Note item 2, a call for Socialist Financing from a writer at Project
Syndicate, a site owned by George Soros. Although I usually oppose
Soros, in this case I agree.
But the Economist magazine, representing London bankers and in
particular the Rothschilds, opposes such Socialism. They do, however,
support Cultural Marxism - that's the kind of Left policies they
promote, not financial ones.
Note item 10 below, in which The Economist warns against Strategic
Protectionism.
They are trying to preserve Globalization, in the face of the populist
movements to restore the nation-state.
It looks as if there is a divergence between Soros and Rothschild.
(2) Covid19 Pandemic Requires Socialism - Bernie's policies are becoming
necessary
Project Syndicate is owned by George Soros - Peter M.
Covid19 Pandemic Requires Socialism
Apr 9, 2020
Willem H. Buiter
By introducing a uniquely disruptive shock to both supply and demand,
the COVID-19 pandemic has upended longstanding ideological debates
almost overnight. Suddenly, far-reaching state intervention in the
economy has become necessary to save market capitalism, which is
unlikely to emerge unchanged.
NEW YORK – Ironically, just as the "democratic socialist" Bernie Sanders
has suspended his presidential campaign in the United States, many of
his policy proposals are becoming necessary around the world.
Social-distancing measures to mitigate the COVID-19 pandemic have
disrupted production and household income streams alike. But the
effectiveness of social distancing could be undermined by workers who
lack proper health insurance, adequate sick pay, unemployment
compensation, or other forms of income support or savings. These
individuals will feel that they have no choice but to keep working,
despite the health risks. Universal health insurance looks like the
inevitable outcome, even in the US, where Sanders, virtually alone among
national politicians, has advocated it for decades.
At the same time, the original supply and demand shocks – to labor and
household consumption, respectively – from the COVID-19 crisis are being
reinforced by the breakdown of global, national, regional, and local
supply chains. And all of these real-economy shocks are causing
disruptions in the financial system, too.Under these conditions, central
banks have a critical role to play in preventing disorderly financial
markets from adding to the strain felt by non-financial companies and
households. At a minimum, central banks must step in to ensure ample
liquidity in key markets, including those for government debt,
commercial paper, and key asset-backed securities such as residential
and commercial mortgages.But, equally important, central banks must
ensure that liquidity for households and corporations does not dry up
because of self-fulfilling, fear-driven withdrawals. Where appropriate,
they can provide monetary financing for fiscal stimulus (helicopter
money), so that governments that otherwise might be constrained by
sovereign-bond markets do not have their hands tied.That said, central
banks are not the appropriate institutions to address business-revenue
shortfalls and the risk of corporate insolvencies, or household-income
disruptions and the associated problems in servicing mortgage, consumer,
and student debt. True, central banks can carry some of the load
temporarily, by purchasing high-yield corporate debt and low-grade
commercial paper. But the big job of preventing an economic disaster
invariably rests with fiscal authorities.In the case of the COVID-19
crisis, public funding and mandates are needed to ensure that everyone
can get tested expeditiously for the coronavirus. Global cooperation can
play an important role here, given the imperfectly synchronized nature
of national outbreaks. But, ultimately, all coronavirus-related
treatment (including hospitalization) will need to be covered by the
state, and only national governments can marshal funding on that scale.
Likewise, the state will also need to provide full compensation for
workers who lose income as a result of the crisis. To maintain aggregate
demand, governments could introduce a temporary universal basic income,
whereby every adult receives a periodic cash transfer for as long as the
crisis lasts. Even the US under President Donald Trump has blundered
toward this obvious palliative measure, by including in its recent $2.1
trillion rescue package a disbursement of $1,200 for every adult earning
less than $75,000 per year. But even with government-provided income
support, companies are still likely to experience dramatic revenue
shortfalls, owing to crisis-related disruptions to the labor force,
domestic and external demand, and supply chains at all levels. Here, the
state could step in as a buyer of last resort, or it could provide
credit or credit guarantees to financially distressed companies. Such
credit could be converted into equity, either immediately or once the
crisis is over, in the form of non-voting preference shares, thereby
impeding the slide into a centrally planned economy.There should be no
restrictions on eligibility for the various forms of financial support
outlined here. Large corporations are just as likely as small- and
medium-size enterprises, the self-employed, or gig workers to be
affected by the demand shortfall and supply-chains disruptions. And
though they may be able to tide themselves over for a while – owing to
their superior access to bank lending and debt markets – they cannot
hold out forever. Given the build-up of non-financial corporate debt
before the pandemic, we could easily see a wave of corporate defaults
and insolvencies in the absence of state intervention.
Banks and non-bank financial intermediaries did not start the crisis
this time, but they will inevitably become a part of it and will also
become candidates for state rescues and bailouts as the asset side of
their balance sheets deteriorates. And command methods familiar from
wartime market economies and centrally planned economies – think of
Trump’s invocation of the Defense Production Act to force General Motors
and 3M to produce critical supplies – could well outlive the
crisis.Finally, the new socialism will also have an international
dimension. Italy, for example, will need support from the European
Central Bank or the European Stability Mechanism, or else through the
issuance of eurozone coronavirus bonds. Among emerging and developing
economies, external debt markets are already constraining the ability of
many to provide fiscal support. Addressing these limitations with more
foreign aid from advanced economies – including a targeted increase in
the International Monetary Fund’s Special Drawing Rights – would be the
morally correct and economically sound response.As the trajectory of the
COVID-19 crisis indicates, capitalist market economies will have to give
way, at least temporarily, to an improvised form of socialism aimed at
restoring income flows for households and revenue flows for companies.
We will then see whether the consequences of this experiment with
socialism last well beyond the end of the pandemic.
(3) Fed and Treasury funding Covid response looks a lot like the MMT
Bernie was promising
Bernie Led The US To The Holy MMT Land But Didn't Get To Go In
From Michael Every of Rabobank
Thu, 04/09/2020 - 11:45
For once there are headlines that are not 100% virus-focused. First, the
US presidential election officially became a two-horse race when Bernie
Sanders decided to follow the advice from The Highlander: "You know what
they say? It's better to Bern Out than fade away." So now there is only
The One – Joe Biden. (Who, like Bernie, one could believe if uttering
the words "I am Connor MacLeod of the Clan MacLeod. I was born in 1518
in the village of Glenfinnan on the shores of Loch Shiel." - for the
wrong reasons.)
Earlier in the year we had written a Through The Looking Glass report
imagining what a Sanders presidency might look like – that is not going
to happen. Yet we already have multi-trillion USD fiscal deficits and
the Fed and Treasury inserting themselves into the very middle of every
economic pie in what looks a lot like the MMT we suggested Bernie would
be open to: we even have cheques being sent out to virtually everyone –
as the smaller part of the bailout. Bernie, like Moses, led the US to
the Holy MMT Land but didn't get to go in.
As to the US election in November, will Bernie voters back Biden, or
Trump, or Bern Out completely? And what position is Biden going to take
on de facto MMT? 'Let's get back to small government' or 'we do big
government better'? Of course, he's also got another decision to make:
does he cede the China card to Trump, or go the same way? A Washington
Post survey yesterday showed that 77% of respondents blame China for the
coronavirus, including 67% of Democrats; 71% say US firms should pull
back manufacturing from China; 69% support Trump's tough trade policies;
and 54% say China should pay reparations(!) This is not a backdrop that
suggests US-China tensions are going to be easing any time soon.
Tensions that are easing, apparently, are on the oil front. Today will
see the key meeting that will decide if global oil output is slashed or
not – and suggestions are that this time Russia will agree to it, which
just leaves the wild-card Saudis, who started the whole race to the
bottom of the bottom. Oil prices are up in the Asian session on the
presumption that something gives here. If true, it is obviously good
news for oil producers – and it's another kick in the teeth to oil
consumers. One of the only economic stimulants that people were able to
feel in recent weeks, even if they could not get out and benefit from it
directly, was lower oil prices: now they may re-set back to a more
normal recent range….which will up the ante on the government to do even
more fiscally, of course. So more MMT.
The Fed's minutes last night surprisingly had nothing to say about how
they see this all working out economically. As our Philip Marey notes,
"The most conspicuous aspect of these minutes is not what is in them,
but what is not: the first set of FOMC projections in 2020. Perhaps they
don't want to further undermine economic confidence, and blend in later
with the range of gloomy projections by private sector forecasters that
are already out there, but this is a notable deviation from the usual
transparency in the post-Greenspan Fed." Well, there are lots of
central-bank deviations happening as we move from Bagehot to Bags-o'-money.
And there need to be. The UK's lockdown is set to be extended beyond
next week, which should not be a surprise with a PM still in intensive
care; the WHO, making themselves even more unpopular with the White
House, have warned that it is still far too soon to be looking to ease
lockdowns in places like Europe; Tokyo's governor has said PM Abe's
COVID-19 measures aren't tough enough and wants more businesses closed;
and a study based on China's experience published in The Lancet claims
that levels of lockdown cannot properly end without a vaccine – a point
echoed by Bill Gates in a recent interview, although he refers to "mass
gatherings". (Or even The Gathering.)
So to those markets eagerly pricing for full recovery - "Patience,
Highlander."
Which is also appropriate advice for those watching Europe, where we are
apparently no closer to any political resolution on the Coronabonds
issue that will allow the Eurozone to act as aggressively on the fiscal
front as the US and UK, among others, are doing. Yesterday had a Reuters
source story suggesting the ECB has told the Eurogroup that EUR1.5
trillion is needed as fiscal support to keep Europe above water, and
that Germany and the Netherlands replied that a maximum of EUR500bn
would be on offer. "There can be only one" springs to mind – and that
someone thinks they are immortal.
(4) Change the Accounting rules to discourage Borrowing; remove
Deductibility of Interest
A 100-Year Chance to Shake Up Debt and Taxes
Deductible interest grew out of the crises of 1918. The Covid-19
upheaval should be used to roll it back.
By Andy Mukherjee
For 100 years now, capitalism has had a pro-leverage bias. Unlike
dividends, which are paid only after the state has taken its share of
earnings, interest is deducted from pretax profit, shrinking the pie
available to the government.
This accounting oddity, which treats debt capital more favorably than
equity, has driven the leveraged buyout industry, led to a correction in
a foundational paper by a pair of Nobel economics winners, and played a
role in the 2008 financial crisis. Disaffection with this anomaly has
long swirled as an undercurrent, especially in tax-starved developing
economies. The coronavirus is reheating the debate.
Industrial losses may need to be socialized en masse to get displaced
workers back on the job and prevent the global economy from spiraling
into depression. To manage the backlash against using public money for
private gains, more countries are likely to follow the U.S. Congress and
the U.K. banking regulator, which have pushed for a halt to buybacks and
dividends. But corporate rescue this time may also involve a rewriting
of accounting rules to encourage deleveraging, so that bailouts are
needed less often and are less costly.
It was in 1918, when economists were likening the global spread of an
excess profit tax on wartime corporate income to the deadly outbreak of
the Spanish flu, that the U.S. relented and allowed all interest paid to
be deducted from taxable profit. It was a temporary measure to give
firms relief, but although the extra tax burden went away in 1921, the
favorable treatment of interest income stayed and was copied around the
world.
The debt bias is very real. In the late 1950s, academics Franco
Modigliani and Merton Miller controversially asserted that corporations
should be indifferent to the mix of debt and equity in their capital
structure. Five years later, the professors issued a correction,
acknowledging that a dollar of debt would raise the value of a firm by
50 cents, the then-prevailing corporate tax rate. 1
The idea of a withholding tax on interest payments has done the rounds
since at least 1982, but how does a foreign investor or a tax-exempt
local investor get credit? No country would want foreigners to shun its
corporate debt and go where there's no withholding. Developing economies
have also been ambivalent. Their tax authorities hate it when
multinationals give loans to their profitable subsidiaries, thus
reducing their taxable income in poor nations.
On the other hand, it didn’t take long for local firms in Asia, Latin
America or Eastern Europe to figure out that they, too, could attract
large pools of Western savings by souping up shareholder returns with
higher leverage. It helped that the cost of the debt was tax deductible.
To the extent the borrowings came from state-owned local banks, the
lenders’ interest income flowed to the government as taxes and dividends.
After the 2008 crisis, policymakers looked aghast at the debt-financed
expansion in banking over the previous three decades. But beyond
specifying higher regulatory capital, they couldn’t do much to shake the
inertia. As McKinsey & Co. noted in 2010, replacing the stock of
financial sector debt with equity in just 14 countries would have
required more than 60% of the then-existing global equity capital.
Not All Capital Costs The Same Tax deduction of interest made debt
financing cheaper than equity, leading to a leverage buildup and the
2008 financial crisis
Source: IMF staff discussion note, "Tax Biases to Debt Finance:
Assessing the Problem, Finding Solutions." Data for 2007
*Cost of capital to firm when individual investor pays tax on capital
income at the top rate
No wonder, then, that the world economy has kept accumulating debt.
China stepped up borrowings to hold on to high growth in a slow-speed
world; India wrecked its finance industry to achieve China-like
expansion. On the supply side, as banks retreated under regulatory
pressure for more capital, private credit from insurers, pension funds
and other non-banks took their place, growing to a $300 billion industry
by 2018 from $100 billion in 2010.
The additional corporate value garnered with cheap debt isn’t a free
lunch. An International Monetary Fund staff discussion note warned in
2011 that "costs to public welfare are larger — possibly much larger —
than previously thought." The 2017 overhaul of the U.S. tax code
restricted interest deduction to 30% of earnings before interest, tax,
depreciation and amortization as an offset for slashing the corporate
rate to 21% from 35%. The U.K., too, put a limit.
But then came the coronavirus. The sheer scale of economic disruption
and job losses means that governments and central banks will join hands.
Japan’s near-$1 trillion fiscal spending has set the tone for outsize
government borrowing. But while assuming a more active economic role,
governments will also want to show that they aren’t running a Ponzi
scheme. Disallowing interest deduction will generate resources as well
as play into the zeitgeist for more public welfare.
Too Bloated to Fight After growing 40 percentage points since the onset
of the 2008 crisis, the global debt pile may swell another 20 points to
342% of GDP this year, IIF says
Sources: Institute of International Finance
As independent strategist Gerard Minack noted recently, our world is
primed to maximize financial returns on the assumption that nothing will
go wrong. When things do, not just once but twice in 12 years,
politicians must ask whether a smaller, more resilient firm, valued a
little less than before, is better than a large but fragile enterprise.
Minack also believes that temporary restrictions on stock buybacks could
be accompanied by changes to the tax treatment of debt.
With industries of all hues begging governments for survival capital,
rebates and even employee wages, bargaining power of firms is at rock
bottom. The unfinished tax reform agenda has a chance. Given that
suppliers of debt financing are spread all over the world, a withholding
tax on interest payments could cause dislocations. "A less disruptive
option," as law professors Michael Graetz and Alvin Warren, Jr. argued
in a 2016 essay, "might be to deny deductions for all or part of
interest payments at the corporate level."
Overcoming entrenched resistance to a once-in-100-years change won’t be
easy. The only time to even attempt it is when faced with a disaster not
encountered since the Spanish flu.
Modigliani went on to win the Nobel prize in 1985; Miller would get it
five years later.
This column does not necessarily reflect the opinion of Bloomberg LP and
its owners.
To contact the author of this story: Andy Mukherjee at
To contact the editor responsible for this story: Patrick McDowell at
(5) Bank Of England Will Directly Finance Government Coronavirus
Spending - Positive Money
Major Breakthrough On Public Money Creation: The Bank Of England Will
Directly Finance Government Coronavirus Spending
April 9, 2020
by Hannah Dewhirst
UK central bank becomes first in the world to adopt direct monetary
financing to fund government spending during the coronavirus crisis.
This move demonstrates once and for all that the government need not
depend on private markets to finance its spending.
This morning the Bank of England made the welcome announcement that it
would expand the government’s pre-existing overdraft at the Bank, known
as the Ways and Means facility, to provide the government with
additional spending power for its Covid-19 response. The Bank was
already indirectly financing the Treasury through its quantitative
easing (QE) programme, but today’s step represents more direct coordination.
For years politicians used high levels of public debt as an excuse to
justify brutal spending cuts. But now, by allowing the Treasury to spend
without even increasing public debt, such excuses are well and truly
shattered. Politicians will be left with no recourse to claw coronavirus
spending back with draconian austerity measures once this crisis is
over. We already knew that austerity was a deeply misguided economic
project, this move further strengthens the argument that it should never
be considered an economic necessity, while conclusively proving the
existence of a magic money tree once and for all.
Governor Andrew Bailey had denied contemplating such a move at the start
of the week, and in its statement the Treasury said the measure would
only be "temporary and short-term". But the Ways and Means mechanism,
which we first called attention to nearly seven years ago, allows the
government to spend without having to rely on private financial bond
markets. This will ensure continued access to funding even if private
debt markets are disrupted in the coming months which, given the
economic fallout of the current crisis, they very well could be.
In being able to bypass the private bond market until the Covid-19
pandemic subsides, the UK public can rest safe in the knowledge that the
government will not struggle to finance the costs of its new coronavirus
response programs, such as the job retention scheme.
Positive Money has been campaigning for public money creation since our
inception and we applaud the Bank’s announcement today as a sign that it
is finally embracing all powers at its disposal to help the UK public
during our greatest hour of need. We strongly encourage the Bank and the
Treasury to continue using this facility in the long-term to support the
public’s needs.
The levels of public spending needed to fight coronavirus, support
businesses and protect people’s livelihoods during this crisis are
necessary and unprecedented in living memory. This move by the Bank of
England today thankfully confirms what we knew all along: the UK
government faces no budgetary constraints in fighting Covid-19 – and it
never did. Rather than an economic necessity, austerity was always a
destructive political choice and today marks another nail in its coffin.
(6) Bank of England to finance UK gov't; looks like Monetary Financing,
despite denial
Bank of England to finance UK government Covid-19 crisis spending
With lockdown likely to be extended, Treasury can draw on billions in
extra funds to support cashflow
Larry Elliott
Thu 9 Apr 2020 17.03 AEST Last modified on Fri 10 Apr 2020 01.08 AEST
The Treasury has announced it is to extend its overdraft facility at the
Bank of England in a fresh sign of the mounting financial pressure on
the government caused by the Covid-19-enforced lockdown of the economy.
Amid growing speculation that the quarantining will be extended next
week, the Treasury said it needed extra firepower to support its
cashflow and to ensure financial markets ran smoothly.
The Treasury has a long-established overdraft facility at the Bank
through the "ways and means" facility. It currently stands at £400m but
at times of crisis the chancellor can draw on it as a source of cash,
and during the 2008 recession it rose to £19.8bn.
The sudden closure of businesses and the furloughing of workers has
resulted in the drying up of tax revenues, forcing the Treasury to call
on its overdraft facility to supplement the money it raises from the
sale of government bonds.
The prime minister’s official spokesman said: "The Bank of England will
temporarily extend use of the government’s longstanding ways and means
facility to help government cashflows and provide a temporary short-term
source of additional funding."
Pressed if the government was running out of money, he said: "The
government will be raising the finance through the debt markets and
continues to use the markets as a source of financing. For example,
there have been four debt auctions this week and they all have been
successful."
In a joint statement, the Treasury and the Bank said they had agreed to
extend the use of the ways and means facility as a temporary measure
during the disruption caused by Covid-19.
They said the government would continue to use the markets as its main
source of financing, and its response to Covid-19 would be fully funded
by additional borrowing through normal debt management operations, under
which government gilts are sold to investors.
"Any use of the W&M facility will be temporary and short term. As well
as temporarily smoothing government cashflows, the W&M facility supports
market function by minimising the immediate impact of raising additional
funding in gilt and sterling money markets."
By stressing that the use of the overdraft facility will be short term
and that any extra borrowing would be repaid as soon as possible this
year, the government has sought to reassure financial markets that the
spiralling cost of Covid-19 will not be met by the Treasury ordering the
Bank to print money to finance its spending.
Both the chancellor, Rishi Sunak, and the Bank’s governor, Andrew
Bailey, are keen to quash speculation that the cost of the lockdown will
eventually force the government into monetary financing, also known as
"helicopter money". [...]
(7) BoE gives British gov't unlimited overdraft (interest free) to pay
wages; looks like Monetary Financing
APRIL 10, 2020 / 5:10 AM / UPDATED 2 HOURS AGO
Fed, Bank of England push deeper into uncharted territory in face of
coronavirus slump
Howard Schneider, William Schomberg
WASHINGTON/LONDON (Reuters) - The U.S. Federal Reserve and the Bank of
England ramped up their emergency responses to the world’s escalating
coronavirus recession on Thursday as they pushed deeper into territory
once considered fraught with risk for central bankers.
The Fed, in its boldest move to date to soften the historic shutdown of
much of the U.S. economy, pledged $2.3 trillion to help local
governments on the front lines of the health crisis and to prop up small
and mid-sized businesses.
In London, the BoE said it would allow Britain’s government to run up an
unlimited overdraft as the state promises to pay wages to millions of
people laid off during shutdown, cut taxes for businesses and expand its
welfare system.
With central banks around the world trying to cocoon their their
shuttered economies while the shutdowns last, Fed chief Jerome Powell
dismissed suggestions they risked creating an inflation surge or
distorting the way companies do business.
Unlike the global financial crisis more than a decade ago, when a
largely broken banking system brought the world economy to its knees,
this time governments were asking entire populations to make what Powell
described as "sacrifices for the common good" by staying to try to curb
the spread of the virus.
As a result of those social-distancing measures, millions are threatened
with unemployment or seeing businesses that were thriving just a few
weeks ago pushed to the brink of failure as commerce grinds to a halt.
"We should make them whole. They did not cause this," Powell said in a
webcast hosted by the Brookings Institution. "This is what the great
fiscal power of the United States is for, to protect these people from
the hardships they are facing."
In a reminder of the scale of the hit to the U.S. economy, data showed
16.8 million Americans filed for unemployment benefits in the last three
weeks.
The Fed, adding to an already extensive set of crisis programs, on
Thursday said it would pump up to $500 billion into local governments by
buying municipal debt. It also said a new "Main Street" facility will
use banks to funnel up to $600 billion in loans to small to medium-sized
firms, and it expanded measures to back up corporate debt markets.
Analysts said the Fed seemed willing to buy into any assets that could
support the economy as it cast aside some of its traditional caution
about risky lending.
Oliver Blackbourn, a portfolio manager at Janus Henderson, said helping
companies that choose to take on debt to boost their shareholder returns
brought a level of moral hazard in terms of what sort of behaviour a
central bank should support.
"It will be interesting to see how the Fed reacts to losses should the
coming default cycle take a significant toll on its holdings," he said.
Powell on Thursday emphasized that, as broad as the central bank’s
effort has become, it is meant to be temporary. Once the virus is
controlled and recovery under way, "we will put these emergency tools
away," he said.
Other policymakers have maintained the same.
Still, BoE Governor Andrew Bailey has had to counter claims that the
British central bank is resorting to direct monetary financing of the
government.
(8) US ponders Monetary Financing, like Europe. That's the way to keep
millions in work
How Europe manages to keep a lid on coronavirus unemployment while it
spikes in the U.S.
By Michael Birnbaum
April 11, 2020 at 12:51 PM EDT
BRUSSELS — The coronavirus pandemic is sending U.S. unemployment figures
to levels that could rival the Great Depression. In Washington, that
might feel like the inevitable consequence of a health crisis that has
forced a sudden halt to much of the economy. But the situation across
the Atlantic suggests the dramatic rise in U.S. unemployment — with 17
million people filing for benefits in the past four weeks — is a choice.
But isn’t Europe also on lockdown?
The economic situation in Europe is just as grim.
The French Central Bank estimates its country’s economy contracted by 6
percent in the first quarter, the worst plunge since 1945, for instance.
But so far, workers are largely protected. Many governments have stepped
in with costly programs to subsidize their wages to avoid layoffs.
The consequences have been dramatic. Prominent German economic
institutes anticipate a bump in Germany’s unemployment this year ranging
from 0.2 to 0.5 percentage points. The Ifo Institute for Economic
Research thinks the unemployment rate in Germany will peak around 5.9
percent midyear before subsiding.
(In most European countries, official unemployment figures are not
released as quickly as in the United States, so many numbers remain
estimates for now.)
Compare that with the United States, where JPMorgan Chase estimates
unemployment could hit 20 percent in the second quarter.
In Europe, demand for the government subsidies has been enormous,
offering a strong clue that — if it were not for the programs — layoffs
would be dramatically higher.
In Germany, for instance, 650,000 employers had notified employment
agencies by last week of their intention to make use of the country’s
short-time work program. Under the system, employees have their hours
scaled back, and the government pays them up to two-thirds of their
normal salary, while the employer pays little or nothing. Once the
employer is ready to pay full wages again, everything returns to normal
— there are no layoffs.
Many economists credit the system for having enabled Germany to come
roaring back after the 2008 global financial crisis since its companies
did not lose the expertise of their workers and were ready to zoom to
full capacity once the recovery started. This time, many European
countries have imitated their neighbor.
Isn’t that expensive?
It certainly is. But so is a major economic contraction. Ordinary
unemployment benefits in Europe also tend to be more generous than those
offered in the United States, so the difference between subsidizing
employment and cushioning the blow of layoffs is more limited.
Germany’s employment agencies have already asked for an extra $11
billion to help address the demand.
IRS to launch tool to track $1,200 stimulus payments
The French system, meanwhile, is already covering 8 million people — a
third of the country’s private sector workers. The French government
will cover up to 84 percent of a worker’s salary, and the Labor Ministry
estimates the costs will be $21 billion over the next three months.
But, as in Germany, the payoff will be that French unemployment
increases will probably be fairly limited. One private analytics firm,
Xerfi, estimates that the rate will rise to 9.6 percent this year, up
from 8.5 percent in 2019.
The bump — though it will be painful — is a relative hiccup compared
with the size of the economic disruption. French Labor Minister Muriel
Pénicaud has said that half the country’s economy has come to a halt.
In Britain, the government has promised to subsidize up to 80 percent of
workers’ salaries so long as they are not laid off, but it is struggling
to get its program up and running. The Institute for Employment Studies
estimates the cost of the British program could be $50 billion over
three months. The institute believes unemployment has already doubled,
from 3.9 percent to 7.5 percent, which is above the highest point during
the crisis that started in 2008.
Hard-hit Italy, meanwhile, has simply banned its companies from making
layoffs for 90 days.
Could something go wrong?
The wage-subsidy programs will work best if the pandemic-related
shutdown is relatively short. If that happens, then companies will be
well-positioned to speed back to business with their old workforce in
place — and, of course, the workers will have suffered far less
economically in the meantime.
If the shutdowns drag on — into 2021, for example — then the programs
will be far more costly, and they may also be significantly less effective.
The longer the economy remains in a coma, the more likely it will have
changed in major ways once it reopens. If people start traveling less,
for instance, it may not be sustainable to keep subsidizing the wages of
airline or hotel workers whose industries may not bounce back to
pre-pandemic levels.
But European governments have committed to this approach for the time being.
"We have one of the strongest welfare states in the world, and we have
built up reserves for difficult times during good times," German Labor
Minister Hubertus Heil said last month.
Could the United States do the same thing?
A lot of damage has already been done in the United States. Companies
that laid off their workers may not take them back.
GOP leaders refuse Democrat-drafted aid package
In Europe, many governments had programs in place as part of their
safety nets already, and simply expanded them to meet the size of the
crisis.
Still, there are some suggestions coming from unlikely quarters that
Washington try something similar. Sen. Josh Hawley (R-Mo.), a strong
Trump backer, said the United States should copy the British program and
cover 80 percent of wages.
"The goal must be to get unemployment down — now — to secure American
workers and their families, and to help businesses get ready to restart
as soon as possible," he wrote in a Washington Post op-ed.
(9) Spooks calls for Strategic Protectionism to keep essential
industries nationally owned
UK spy agencies urge China rethink once Covid-19 crisis is over
MI6 and MI5 expect Beijing to be more assertive and want government to
consider tighter control of strategic industries
Dan Sabbagh
Defence and security editor
Published on Sun 12 Apr 2020 23.11 AEST
Britain’s intelligence community believes the UK needs to reassess its
relationship with China after the coronavirus crisis subsides and
consider if tighter controls are needed over high-tech and other
strategic industries.
They reckon China will become more assertive in defending its one-party
model as having successfully tackled the pandemic and that Boris Johnson
and other ministers will have to take a "realistic view" and consider
how the UK responds.
Issues being aired are whether the UK wants to restrict takeovers of key
companies in high-tech areas such as digital communications and
artificial intelligence, and whether it should reduce Chinese students’
access to research at universities and elsewhere.
But MI6, the foreign intelligence service, and MI5, its domestic
equivalent, still believe it was correct to allow Huawei access to
Britain’s 5G network, capped at 35% – a decision made by Johnson in
January – although the new emphasis on China may make that decision
increasingly hard to defend as Conservative rebels press for a rethink.
A Whitehall source said the UK needs to ensure diversity of supply "in
6G and 7G" and, more broadly, to protect "the crown jewels" of
technology, research and innovation.
MI6 is also understood to have told ministers that China was
significantly under-reporting the number of coronavirus cases and deaths
in January and February, echoing similar briefings given by the CIA to
the White House.
Intelligence agencies have been urging a greater emphasis on Chinese
activity for months, and the announcement of Ken McCallum as the new
director general of MI5 at the end of last month was accompanied by a
promise that the organisation would focus more clearly on Beijing.
Late last month, Michael Gove, chancellor of the Duchy of Lancaster,
accused China of playing down the initial threat posed by Covid-19. "It
was also the case that some of the reporting from China was not clear
about the scale, the nature, the infectiousness of this," he said.
Other ministers who are known to be China-sceptics include Priti Patel,
the home secretary, Ben Wallace, the defence secretary, and Jacob
Rees-Mogg, leader of the house.
Concern about China, however, remains tempered by the UK’s deep trade
relationship with Bejing, a point reinforced when Gove was forced to
soften his criticism earlier this month after the arrival of
badly-needed Chinese ventilators in the UK.
"Today 300 new ventilators arrived from China. I would like to thank the
Chinese government for their support and securing that capacity," the
senior minister said.
We have failed to take a strategic view of Britain’s long-term economic,
technical and security needs Tory MPs Under David Cameron and George
Osborne, the government pursued a policy of actively courting Chinese
investment in areas such as nuclear power and telecoms. When Theresa May
took over as prime minister, she ordered a review of the China General
Nuclear Power Group’s investment in the new Hinckley Point nuclear
plant, but it was allowed to proceed.
Charles Parton, a former China diplomat, and a senior associate fellow
at the Royal United Services Institute, said that "a rethink of UK-China
relations has been needed for a long time" because Beijing sees itself
as in long-term competition with the west.
But the foreign policy specialist also argued that the agencies’ job was
"not to make policy but provide information, and added: "When they have
strayed in the past, the results have not always been edifying". Despite
their concern about high-tech, it was not clear that spy agencies were
technological experts, Parton said.
The future relationship with China is one of many issues due to be
tackled by the integrated review of foreign policy and defence announced
in February. It had been due to report in the autumn but is widely
expected to be delayed given the current crisis.
A group of Conservative backbenchers, many of whom were prominent
Brexiters, have begun to form a bloc of China-sceptics. Thirty-eight of
the party’s MPs voted against allowing Huawei into supplying 5G
technology last month, cutting the government’s majority in a Commons
vote to 24.
Fifteen Tory MPs, led by Bob Seely, and including former ministers Iain
Duncan Smith and David Davis, wrote to Johnson over the weekend asking
that the UK "rethink our wider relationship with China" after the
pandemic has eased. "We ... have failed to take a strategic view of
Britain’s long-term economic, technical and security needs," they said.
(10) Economist warns against Strategic Protectionism
Schumpeter
Strategic pile-up
The idea that some industries are too important to leave to markets is
back on the agenda
Apr 8th 2020 edition
"IF WE LEARN anything from this crisis, [it is that] never again should
we have to depend on the rest of the world for our essential medicines
and counter-measures," thundered Peter Navarro, a White House trade
adviser, on April 3rd. A few days later President Donald Trump pressed
3M, an American multinational which makes medical masks, to divert more
of them home, at the expense of other countries.
Mr Navarro and his boss are knee-jerk protectionists. But with the
market for masks broken by covid-19 (see article), their worries are
understandable. So are similar noises by other national leaders.
Emmanuel Macron, the French president, often painted by critics as a
free-trading neoliberal, has called relying on others for food supplies
"madness" and his finance minister instructed supermarkets to buy only
domestic produce. The EU has curbed exports of some medical gear. India,
the world’s biggest maker of generic drugs, has done the same with
hydroxychloroquine, an antimalarial drug that some suggest (with little
evidence) might treat covid-19. Countries from Kazakhstan to Vietnam
have cut food exports, leading the UN to warn of shortages.
Many of the restrictions will be lifted once the pandemic has passed.
But not all, for the virus has reinforced an old idea that was already
gaining ground again: that in an uncertain world, some industries are
"strategic", simply too important for countries to leave to unfettered
markets, and so deserving of special protection. The notion is
attractive in theory, but perilous in practice.
If the copious academic literature on strategic industries has a
conclusion, it is that no one can agree on what counts as one. The
narrowest definition covers sectors directly vital to war-fighting:
makers of weapons and of stuff needed to forge them (steel) and operate
them (energy). Even in the tightly integrated EU most countries shield
national defence firms. At its most expansive, the concept can encompass
any economic activity, since all of it contributes in some roundabout
way to a state’s defensive capability. Everything is strategic in North
Korea.
Many reasonable opinions fall somewhere between these two extremes.
After the first world war Britain created the Forestry Commission to
ensure a strategic supply of timber. Today America and China treat
things like computer chips, artificial intelligence or genetic
engineering as strategic. A government body called the Committee on
Foreign Investment in the United States (CFIUS) scrutinises the
national-security implications of deals involving American firms.
Worried about losing strategic assets cheapened by the market rout to
foreign buyers, Australia has just tightened its takeover rules. The EU
is urging member states to do the same in sectors like utilities and
transport.
In principle such rules are sensible. The trouble begins when their
opacity—CFIUS rules, for instance, are notoriously hazy—allows
politicians to extend the definition of "strategic" to include things
that are tied not to national survival, but to perceived national
greatness. Governments have long pampered loss-making national airlines,
sometimes pretending that this has to do with the strategic importance
of aircraft. In 2005, after PepsiCo briefly eyed Danone, a French
yogurt-maker, France’s government vowed to protect it and other
"strategic" companies from foreign suitors.
Many businesses covet the designation. No wonder: it can be a ticket to
cushy cost-plus contracts (think Boeing), state subsidies (Chinese
national champions like Huawei) and protection from irksome foreign
competitors (just about anyone). And with a little ingenuity, almost any
firm can argue its products deserve the label. After all, who can
predict what will be useful in a crisis? In the second world war Britain
retooled its furniture factories to produce parts for the Mosquito, a
capable wooden fighter-bomber. Amid the current pandemic LVMH, a French
luxury group, is turning some perfume factories over to make hand sanitiser.
Still, governments should resist indulging firms too liberally, for two
reasons. First, sheltering them behind national-security arguments is,
like all protectionism, expensive. The semiconductor industry, for
instance, is ferociously high-tech. Its planetary-scale supply chain
comprises ultra-specialised companies in Taiwan, Japan, South Korea and
the Netherlands, each spending billions on research. Even a superpower
would struggle to replicate all this within the borders of a single
country, as America and China have both discovered. Makers of generic
drugs are easier to nurture at home. But even there, global supply
chains have arisen because they are efficient. Unwinding them will thus
be costly, and the costs will be borne by consumers and taxpayers.
So will those stemming from protected firms’ tendency to grow bloated,
inefficient or—as has happened with Boeing’s ill-fated 737 MAX
plane—potentially dangerous. All this, critically, also makes them less
able to respond effectively when a crisis does strike. Prisoners of
their own minds
The second reason for governments to go easy on strategic protectionism
is that it risks ushering in the baleful logic of the prisoner’s
dilemma. Actions that appear to be in the interest of individual
countries lead to a nationalistic, distrustful world that is bad for
everyone.
{What about the 1950s & 60s? Those protectionist decades were a Golden
Age - Peter M.}
The present scramble for medical equipment is causing bitter rows, even
between allies. Germany has accused America of diverting shipments of
face-masks bound for Europe, decrying its actions as "modern piracy" and
"Wild West tactics". After the EU’s ban on the export of medical
equipment, Aleksandar Vucic, Serbia’s president, declared that European
solidarity "does not exist".
The more that some states pursue such policies, the more it becomes
rational for others to do the same. That risks leaving the world divided
in the face of the next crisis, whether that is another pandemic, the
next financial crash or a slow-burn disaster such as climate change. A
few industries may indeed be "strategic". But governments should anoint
them cautiously. ?
This article appeared in the Business section of the print edition under
the headline "Strategic pile-up".
(11) Positive Money calls for Central Banks to issue Digital Cash
Digital Cash: Why Central Banks Should Start Issuing Electronic Money
With the impending 'death of cash' and the rise of digital currencies
(such as Bitcoin), there are strong arguments for central banks to start
issuing "digital cash" – an electronic version of notes and coins (also
known as a central bank digital currency). But this raises a number of
questions: how would central banks get new digital cash into the
economy, and how would the public use it? What would the advantages be?
And would there be any impact – positive or negative – on financial
stability?
The Bank of England has already posed questions about the potential of
digital cash, or 'central bank digital currency', prompted by the
ongoing rise of electronic means of payment, and the emergence of
alternative currencies such as Bitcoin. One of the key questions to come
out of the Bank's One Bank Reserve Agenda, released in early 2015, was
"From a monetary and financial stability point of view, what are the
costs and benefits of making a new form of central bank money accessible
to a wide range of holders?"
We argue that there are a significant number of of benefits to issuing
digital cash:
o It widens the range of options for monetary policy: Implementing
digital cash can allow new monetary policy tools to be used. If digital
cash is used to completely replace physical cash, this could allow
interest rates to be lowered below the zero lower bound (although this
is not a policy we would advocate). Alternatively, digital cash can be
used as a tool to increase aggregate demand by making 'helicopter drops'
of newly created digital cash to all citizens, making it easier to meet
the Bank of England's monetary policy target of price stability.
o It can make the financial system safer: Allowing individuals, private
sector companies, and non-bank financial institutions to settle directly
in central bank money (rather than bank deposits) significantly reduces
the concentration of liquidity and credit risk in payment systems. This
in turn reduces the systemic importance of large banks. In addition, by
providing a genuinely risk-free alternative to bank deposits, a shift
from bank deposits to digital cash reduces the need for government
guarantees on deposits, eliminating a source of moral hazard from the
financial system.
o It can encourage competition and innovation in the payment systems:
The regulatory framework we propose would make it significantly easier
for new entrants to the payments sector to offer payment accounts and
provide competition to the existing banks. It would also reduce the need
for most smaller banks and non-banks to run their payments through the
larger banks (who are able to set transaction fees at a level that
disadvantages their smaller competitors).
o It can recapture a portion of seigniorage and address the decline of
physical cash: As physical payments are gradually replaced with
electronic payments, the Bank of England will want to replace physical
cash with its electronic equivalent. Doing so has the advantage of
increasing the 'seigniorage' – the proceeds from creating money – earned
by the Bank of England (and passed on to the Treasury).
o It can help address the implications of alternative finance upon money
creation and distribution: Non-banks, such as peer-to-peer lenders, are
competing with banks and taking on a larger share of total lending. This
has implications for money creation and distribution. When a bank makes
a loan, it creates new deposits for the borrower. But when a
peer-to-peer lending firm makes a loan, it simply transfers pre-existing
deposits from a saver to a borrower; no new money is created. By
proactively issuing digital cash, the Bank of England can compensate for
any shift in lending away from money-creating banks, and the subsequent
fall in money creation.
o It can improve financial inclusion: The firms providing Digital Cash
Accounts would be payment service providers first and foremost, whereas
banks are primarily lenders. Digital Cash Account Providers are
therefore likely to offer accounts to those customers that are excluded
from conventional banking services.
HOW TO IMPLEMENT DIGITAL CASH The Bank of England already issues digital
currency, in the form of deposits held by commercial banks in accounts
at the Bank of England. It can provide digital currency simply by making
these accounts available to non-bank companies and individuals (without
the need for a Bitcoin-style distributed ledger payment system). There
are two ways this can be done.
In a Direct Access approach, the Bank of England could provide accounts
to all citizens in the UK, along with the payment cards, internet
banking and customer service requirements this entails. However, the
Bank of England is likely to see this as inappropriate state involvement
in the private sector and a significant administrative burden.
Consequently, we recommend an Indirect Access approach, in which the
Bank of England would still create and hold the digital currency, but
all payment and customer services would be operated through "Digital
Cash Accounts" (DCAs) provided by (or 'administered' by) private sector
firms. These private sector "DCA Providers" would have responsibility
for providing payment services, debit cards, account information,
internet and/or mobile banking, and customer support. Any funds paid
into the DCA would be electronically held in full at the Bank of
England, so that each DCA Provider could repay all its customers the
full balance of their account at all times. DCA Providers are prohibited
from lending or taking any risk with their customers' funds.
The Indirect Access approach is a much more market-driven approach which
will help to increase competition in current and payment account
services. It minimises the administrative burden on the Bank of England.
Conveniently, the regulatory framework for this approach already exists
in the form of the Payment Services Provider model (with minor adaptations).
MANAGING THE ISSUANCE OF DIGITAL CURRENCY
The Bank of England currently issues central bank money reactively: it
issues banknotes in whatever quantities are needed to meet demand from
the public, and issues central bank reserves in order to meet demand
from the banks. It could choose to issue digital cash in the same way,
by providing the infrastructure for Digital Cash Accounts but letting
the public determine how to split their holdings of money between bank
deposits and digital cash. By making transfers from their bank deposit
accounts, the public, rather than the Bank of England, would determine
how much digital cash needs to be issued. In this case, the money
issuance would be entirely reactive.
Alternatively, by taking a proactive approach to issuance, the Bank of
England could use digital currency as a monetary policy tool to
stimulate aggregate demand and influence the economy. If every citizen
had a Digital Cash Account at the Bank of England (either directly or
indirectly), then it would be a simple process for the Bank of England
to make small and occasional 'helicopter drops' of newly created digital
cash to every citizen. This could be done on a small scale (for example,
just £50 per citizen) and at short notice. This new monetary policy tool
may give the Bank of England a far more accurate and direct method of
implementing monetary policy than conventional monetary policy
(adjusting interest rates) or post-crisis policies such as Quantitative
Easing.
Please note, this is not a proposal to abolish physical cash. Notes and
coins are going to be around for at least another 30 years or so – as
long as people keep using them. For privacy concerns, digital cash
issued by central banks is no different in terms of privacy than
payments made using electronic bank accounts. And again, cash will still
be around for 30 years or so.
PDF DOWNLOAD: Download Here (Free, PDF, 36 pages)
(12) Bradbury Pounds (Treasury Notes) funded Britain in WWI, debt-free money
Bankers, Bradburys, Carnage And Slaughter On The Western Front
A little known historical fact that will collapse even further the
reputation of the City of London.
ARTICLE | NOVEMBER 19, 2012 - 8:27AM | BY JUSTIN WALKER
[...] The Great War And The Debt-free Bradbury Treasury Note:
Three weeks ago, as part of my ongoing research into the banking elite,
I came across a fascinating book entitled The Financiers and the Nation
by the Rt. Hon. Thomas Johnston, P.C., ex-Lord Privy Seal. It was
written in 1934 and republished in 1994 by Ossian Publishers Ltd.
The text of this quite remarkable and rare book is available here.
In Chapter 6, entitled ‘Usury on the Great War’, I’ve selected the
following paragraphs which I believe are both shocking and self-explanatory:
"WHEN the whistle blew for the start of the Great War in August 1914
the Bank of England possessed only nine millions sterling of a gold
reserve, and, as the Bank of England was the Bankers' Bank, this sum
constituted the effective reserve of all the other Banking Institutions
in Great Britain.
The bank managers at the outbreak of War were seriously afraid that the
depositing public, in a panic, would demand the return of their money.
And, inasmuch as the deposits and savings left in the hands of the
bankers by the depositing public had very largely been sunk by the
bankers in enterprises which, at the best, could not repay the borrowed
capital quickly, and which in several and large-scale instances were
likely to be submerged altogether in the stress of war and in the
collapse of great areas of international trade, it followed that if
there were a widespread panicky run upon the banks, the banks would be
unable to pay and the whole credit system would collapse, to the ruin of
millions of people.
Private enterprise banking thus being on the verge of collapse, the
Government (Mr. Lloyd George at the time was Chancellor of the
Exchequer) hurriedly declared a moratorium, i.e. it authorized the banks
not to pay out (which in any event the banks could not do), and it
extended the August Bank Holiday for another three days. During these
three or four days when the banks and stock exchanges were closed, the
bankers held anxious negotiation with the Chancellor of the Exchequer.
And one of them has placed upon record the fact that 'he (Mr. George)
did everything that we asked him to do.' When the banks reopened, the
public discovered that, instead of getting their money back in gold,
they were paid in a new legal tender of Treasury notes (the £1 notes in
black and the 10s. notes in red colours). This new currency had been
issued by the State, was backed by the credit of the State, and was
issued to the banks to prevent the banks from utter collapse. The public
cheerfully accepted the new notes; and nobody talked about inflation.
To return, however, to the early war period, no sooner had Mr. Lloyd
George got the bankers out of their difficulties in the autumn of 1914
by the issue of the Treasury money, than they were round again at the
Treasury door explaining forcibly that the State must, upon no account,
issue any more money on this interest free basis; if the war was to be
run, it must be run with borrowed money, money upon which interest must
be paid, and they were the gentlemen who would see to the proper
financing of a good, juicy War Loan at 31/2 per cent, interest, and to
that last proposition the Treasury yielded. The War was not to be fought
with interest-free money, and/or/with conscription of wealth; though it
was to be fought with conscription of life. Many small businesses were
to be closed and their proprietors sent overseas as redundant, and
without any compensation for their losses, while Finance, as we shall
see, was to be heavily and progressively remunerated.
{visit the above link to see the debt-free currency}
{photo}
Emergency Bradbury Treasury Notes (printed only on one side)
{end}
The real values of the private bankers and the City of London have been
exposed for all to see. Whilst hundreds of thousands of British soldiers
were dying on the killing fields of Flanders and elsewhere doing what
they saw as their patriotic duty, British bankers, safely out of danger
and not sharing the appalling conditions on the Western Front, were only
interested in one thing – how to make obscene profits from Britain’s
desperate efforts to win the war. To say that the private bankers and
the City of London have the morals of sewer rats is to be extremely
unkind to our little rodent friends. But this is the clincher. As a
direct result of the greed and treason of the British private bankers in
preventing the continuance of the Bradbury Treasury Notes, Britain’s
National Debt went up from £650 million in 1914 to a staggering £7,500
million in 1919.
And this is where it all gets particularly interesting. The following is
an extract from the official and current HM Treasury’s Debt Management
Office website ... and it appears to be completely at odds with the
account given by the Rt. Hon. Thomas Johnston. [...]
{visit the above link. There's lots more than I have included here}
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